Wednesday, March 19, 1997 | 11:59 a.m.
The cooperative electric utility industry is at a crossroads, and the direction industry leaders choose in future years could mean the difference between growth or stagnation, said the executive officer of the National Rural Electric Cooperative Association.
"For electric cooperatives who are looking forward to growth, the future looks bright," said Glenn English, a former Democratic congressman from Oklahoma, speaking to 13,000 members Tuesday at the Convention Center. "But success will not come easily. We will have to earn it."
English explained that the anticipated deregulation of the nation's utility industry will stiffen competition among investor-owned electric utilities, as well as among electric cooperatives, which serve 30 million people in 46 states.
Congress deregulated the wholesale market for electricity five years ago when it passed a law allowing utilities and some municipalities to shop for the best price.
In addition, two federal bills already introduced in the House and Senate would mandate electric competition at the retail level by the year 2000 -- much like the federal Telecommunications Act, which last year removed state barriers to competition among local telephone providers.
"The electric cooperative movement certainly has reached a fork in the road," English said. "Either we respond to our consumers and continue to grow, or we ignore our membership and we will probably die."
English noted that electric cooperatives serve nearly 11 percent of the nation's population, accounting for 7.4 percent of kilowatt-hours sold and five percent of the electricity generated.
Although they own and maintain nearly half the electric distribution lines in the United States, they average only 5.8 consumers per mile of line, compared with investor-owned electric utilities that average 35 customers per mile of line.
During his 45-minute address, English was particularly hard on investor-owned electric utilities, accusing them of "hoarding" $74 billion of U.S. taxpayer money at a $5 billion yearly cost through a sophisticated stranded tax benefit scheme that he said is well-known in the industry.
English explained that utilities, such as Nevada Power and Sierra Pacific Power, collect certain federal taxes from consumers but do not pay them -- at least right away.
The utilities defer payment on some of these taxes by taking accelerated depreciation on certain capital improvements such as structures and equipment, and simply don't pay other taxes because of investment tax credits.
NRECA staff members note that in 1995, Nevada Power "retained" more than $200 million in taxes that were collected from customers, at a cost of more than $30 to each customer.
"This is beyond corporate welfare," English said. "It ought to be considered white collar crime."
Tom Henley, Nevada Power spokesman, responded: "We have not been provided with enough information on where their figures come from. We are a regulated entity and all of our costs of business are reviewed by those regulators."
English explained that by the nature of the beast, investor-owned electric utilities work toward the benefit of stockholders rather than the consumer.
But, investor-owned electric utility advocates note that public utilities produce the cheapest, most dependable service in the world, and stiffer tax laws will hurt the consumer in the long run.
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